First half of 2020 sees 30% drop in startup deals; funding falls 40%

Startup funding deals in the first half of 2020 fell over 30 percent to 272 transactions, compared to 393 in the corresponding period last year, while total funding value fell nearly 11 percent to $4.1 billion from $4.6 billion in the same period.

The fall is stark when also compared to the second half of 2019, when the number of deals stood at 356 with a total value of $5.4 billion, as per data from Venture Intelligence.

Venture Intelligence counts only companies less than ten years old as part of its startup funding report.

What could be more worrying for the startup ecosystem is the fall in seed rounds, with just 85 deals worth $106 million this year compared to 139 deals worth $128 million in H1 2019. In the second half of 2019, the startup sector saw 108 seed rounds worth $143 million.

Several large cheques flowed in this year, and there were more deals beyond Series F in H1 2020 compared to the corresponding period in the past several years.

In fact, the 11 deals above Series F were nearly double than the five deals in the second half of 2017 and higher than the 7 deals in H1 2019. The total value of such deals in H1 2020 was at $1273 million, nearly four times the $308 million in H1 2019.

There were 7 deals above $100 million so far this year, compared to 12 in the second half of the previous year and 8 in H1 2019.

Top startup investments

OYO Rooms raised the biggest investment this year so far, with $507 million from SoftBank in March.

Byju’s has been on a fundraising spree since the beginning of the year, raising $300 million from Tiger Global in January and $200 million from General Atlantic in February. Venture Intelligence said the Tiger Global round in Byju’s could also include an additional $100 in a secondary round.

In fact, Byju’s closed funding from top tech analyst Mary Meeker’s Bond Capital just last week, though the investment amount is not disclosed.

Sources said the latest round shot up Byju’s valuation to $10.5 billion, making it the most valuable startup after Paytm.

Swiggy’s $153 million round in February and SaaS startup Postman’s $150 million in June were the other big-ticket investments this year.

Edtech a big winner

The edtech sector bagged the maximum funding in H12020, getting $795 million, led by Byju’s, Unacademy and Vedantu.

The fintech sector saw the largest number of deals (41) led by Digit, Bharatpe, Khatabook and others.

While the COVID crisis has hit the travel and hospitality space, the sector saw the second-highest amount of investments at $722 million, thanks to OYO and Treebo.

The healthcare sector also picked up a massive $376 million in funding in 33 deals, led by Cure.fit, Innovacer, MedGenome and others.

The e-commerce sector raised $393 million, led by Swiggy and BigBasket.

Unicorns

The Indian startup sector added two unicorns in the first half of the year, in Postman and NYKAA. In 2019, as many as nine companies had turned unicorns, while there were 8 new unicorns in 2018.

*Investments in companies less than 10-year-old; **as of June 26, 2020. Source: Venture Intelligence

**May include additional $100M in secondary; Source: Venture Intelligence